In all of the post-budget excitement an interesting story went somewhat under reported. On June 30th John Kasich held a press conference in Findlay to announce that the state had agreed to offer Marathon Oil two separate tax credits and agreed to exempted certain practices done by Marathon Oil from the Commercial Activity Tax (CAT). These breaks will end up costing the state tens of millions of dollars every year. As the Columbus Dispatch reported the next day:
Marathon Petroleum will get a 75 percent, 15-year job-retention tax credit from the state to keep its 1,650 employees in Findlay and a 60 percent, 10-year job-creation tax credit intended to trigger the hiring of 100 employees.
The company also will benefit from an interpretation of Ohio’s commercial activity tax included in the state’s transportation budget exempting exchanges or transfers of gasoline between motor-fuel dealers from the tax.
O.k., so John Kasich giving a tax break to an Ohio corporation is not really news these days. What makes this case different is that in the same article John Kasich clearly states that Marathon had never once signaled any intentions of leaving Ohio.
Unlike some company announcements that Kasich took part in – such as American Greetings and Bob Evans – the governor did not insist that Marathon Petroleum would have moved out of Findlay if not for the state’s tax help.
But the governor also considered his administration’s work with Marathon to be a “partnership” to create and retain jobs.
“I think Marathon always wanted to be here,” Kasich told reporters. “All we’re doing is helping them. Never take more credit than you deserve.”
Remember kids, never take more credit than you deserve. Which is good advice in this instance considering how bad of a deal this is for Ohio, the Governor is probably right in not trying to take too much credit for this awful idea.
First, why would the Kasich administration give tens of millions of dollars of tax breaks to a corporation that made over $2 BILLION in profits lost year, while at the same time insisting that the state is in such poor financial state that we have to slash funds to local government and gut our schools? I’m sure it has nothing to do with the fact that Marathon donated over $116,000 to Kasich’s 2010 campaign and another $30,000 to his “transition fund”. Nope, I’m sure these two things have nothing in common.
The best part is, it doesn’t seem Marathon even needed these breaks. If Marathon never expressed any interest in moving out of the state than what exactly was this massive tax break for? To hire 100 new employees? Lets assume the break in the CAT tax will cost the state $10 million ever year, that means that every employee costs $100,000 each year that the exemption is in place. There is no way this is a good deal for the state, let alone for the precedent this sets when the state has to deal with other companies. Shoot, Marathon didn’t even need to threaten to leave the state, they simply had to ask nicely and they received two tax credits and a tax exemption saving them millions of dollars.
Not only do I believe that this is a horrible, short sighted policy, but so does Kasich’s own Tax Commissioner. In a letter submitted to the Governor’s office from Commissioner Testa, Mr. Testa outlined how the tax department believed that this exemption will cost the state between $5 and $10 million each year and that the exemption will force the state to spend money from the General Revenue Fund to make up for the lost CAT revenue. Or, as I like to put it, a multi-billion dollar corporation gets yet another tax break while the middle class is forced to pay for it. Shared sacrifice people, get use to it. If you are a corporation or a wealthy individual you share in the sacrifice by getting tax breaks, and if you are someone that is not wealthy or a corporation you share in the sacrifice by paying for the tax breaks.
As if this wasn’t all bad enough, this morning the Governor announced the nine individuals who will sit on his precious JobsOhio board and guess who was one of the nine? Yep, Gary R. Heminger, the president and chief executive officer of Marathon Petroleum Corp. Seeing how Mr. Heminger’s last interaction with the state, before being named to the JobsOhio board, was extorting millions of dollars from the state, do you think that will be one of the policies he advises the state to support when it comes to bringing companies to Ohio? Or will his suggestion to companies wishing to get noticed by this administration be for them to donate as much cash as possible to Governor Kasich’s war chest? Either way, it seems that both strategies paid off handsomely for Marathon in this instance.